Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

L. Income Taxes

The provision for income taxes consists of the following:

	Year Ended December 31,
	2012			2011			2010
Current:
Federal	$	5,545		$	789		$	76
State		1,544			1,133			444
		7,089			1,922			520
Deferred:
Federal		(821	)		3,994			2,816
State		(253	)		(288	)		(52	)
		(1,074	)		3,706			2,764
Total	$	6,015		$	5,628		$	3,284

At December 31, 2012, and 2011, the components of the net deferred tax liability were as follows:

	2012			2011
Deferred tax assets:
Allowance for credit losses	$	5,615		$	5,272
Depreciation and amortization		29,717			24,312
Federal alternative minimum tax credit		—			234
State NOL and other state attributes		251			469
State valuation allowance		(355	)		(369	)
Total deferred tax assets		35,228			29,918
Deferred tax liabilities:
Lease receivable and unearned income		(35,539	)		(31,686	)
Residual value		(9,670	)		(9,315	)
Initial direct costs		(418	)		(250	)
Total deferred tax liabilities		(45,627	)		(41,251	)
Net deferred tax liability	$	(10,399	)	$	(11,333	)

At December 31, 2012, we had no federal net operating loss carry-forwards to be used to offset future income. At December 31, 2012, we had state net operating loss carry-forwards of $5.3 million which may be used to offset future income. The state NOL’s have restrictions and expire in approximately one to twenty years. We recorded a valuation allowance against some of our state net operating losses as it is unlikely that these deferred tax assets will be fully realized.

The following is reconciliation between the effective income tax rate and the applicable statutory federal income tax rate:

	Year Ended December 31,
	2012			2011			2010
Federal statutory rate		35.00	%		35.00	%		35.00	%
State income taxes, net of federal benefit		4.80			3.03			7.10
State valuation allowance		(0.06	)		(0.07	)		(4.27	)
Nondeductible expenses and other		(0.61	)		0.54			0.44
Effective income tax rate		39.13	%		38.50	%		38.27	%

The calculation of our tax liabilities involves dealing with estimates in the application of complex tax regulations in a multitude of jurisdictions. We record liabilities for estimated tax obligations for federal and state purposes. For the years ended December 31, 2012, 2011 and 2010, the nondeductible expenses and other tax rate of (0.61)%, 0.54% and 0.44% respectively, includes certain non-deductible stock-based compensation.

Uncertain Tax Positions

As of December 31, 2012, we had liabilities of $52,000 and $11,000 for accrued interest and penalties, respectively, related to various state income tax matters. Of these amounts, approximately $30,000 would impact our effective tax rate after a $22,000 federal tax benefit for state income taxes. As of December 31, 2011, we had liabilities of $17,000 and $4,000 for accrued interest and penalties, respectively, related to various state income tax matters. Of these amounts, approximately $10,000 would impact our effective tax rate after a $4,000 federal tax benefit for state income taxes. As of December 31, 2010, we had liabilities of $15,000 and $6,000 for accrued interest and penalties, respectively, related to various state income tax matters. Of these amounts, approximately $14,000 would impact our effective tax rate after a $7,000 federal tax benefit for state income taxes. These amounts are included in income taxes payable on our balance sheet. It is reasonably possible that the total amount of unrecognized tax benefits may change significantly within the next 12 months; however at this time we are unable to estimate the change.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at January 1, 2010	$	40
Additions for tax positions related to current year		—
Reductions for tax positions as a result of lapse of statute of limitations		(19	)
Balance at December 31, 2010		21
Additions for tax positions related to current year		21
Reductions for tax positions as a result of lapse of statute of limitations		(21	)
Balance at December 31, 2011		21
Additions for tax positions related to current year		63
Reductions for tax positions as a result of closed examinations		(21	)
Balance at December 31, 2012	$	63

Our federal income tax returns are subject to examination for tax years ended on or after December 31, 2009, and our state income tax returns are subject to examination for tax years ended on or after December 31, 2008.